Investors interested in Utility - Electric Power stocks are likely familiar with PGE (POR) and NiSource (NI). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
PGE has a Zacks Rank of #2 (Buy), while NiSource has a Zacks Rank of #4 (Sell) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that POR has an improving earnings outlook. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
POR currently has a forward P/E ratio of 18.55, while NI has a forward P/E of 19.50. We also note that POR has a PEG ratio of 5.64. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. NI currently has a PEG ratio of 8.
Another notable valuation metric for POR is its P/B ratio of 1.62. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, NI has a P/B of 2.05.
Based on these metrics and many more, POR holds a Value grade of B, while NI has a Value grade of D.
POR stands above NI thanks to its solid earnings outlook, and based on these valuation figures, we also feel that POR is the superior value option right now.
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